Power and the Privilege of Clarity: An Analysis of Bargaining Power and Information Transmission
Tinbergen Institute Discussion Paper 11-055/1
33 Pages Posted: 25 Mar 2011 Last revised: 27 Nov 2012
Date Written: July 25, 2012
People in inferior bargaining positions are often vaguer when they express their preferences. In this paper, we explain how power shapes clarity of communication. We analyze information transmission in a cheap talk bargaining game between an informed Sender and an uninformed Receiver.
Our main result is that the maximum amount of information transmission is increasing in the relative power of the Sender. As a result, clarity is a privilege of the powerful. In our model, only Senders whose preferences are closely aligned with the Receiver can completely reveal their information in equilibrium. We discuss some testable implications of our model.
Keywords: Cheap Talk, Clarity, Power, Bargaining, Information Transmission
JEL Classification: C72, C91, D82, D83
Suggested Citation: Suggested Citation